How to avoid PMI (private mortgage insurance)?


There is hardly a borrower who would not like to know how to avoid PMI (private mortgage insurance). Actually, there are certain ways to circumvent a PMI payment.

Firstly, have in mind that with an FHA or VA loan, it is not possible to avoid paying PMI (private mortgage insurance). However, some people taking FHA or VA loans may be entitled to a partial insurance refund.

Ways to Avoid PMI (Private Mortgage Insurance)

PMI can be fully avoided with conventional loans if you are able to pay 20% of the value of the house.

As often borrowers are not able to make such a huge down payment, they could use a combo loan: 80-20-0, 80-15-5, 80-10-10 loans, where the first number signifies the amount of the first mortgage, followed by the amount of the second mortgage (or HELOC), followed by the amount of the down payment the borrower can afford. A comparison among a regular second mortgage, a HELOC or a PMI payment has to run in order to make sure you are in fact benefitting from a combo loan.

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